An economic context still far from the hoped-for recovery...

In the first quarter of 2021, the economic situation remained depressed with, according to INSEE, GDP down slightly (-0.1%) and household purchasing power down by 1%. For the second quarter of 2021, the GDP gain expected by the Banque de France is only 0.5 points.

The final decontamination process only began in May (end of travel restrictions, reopening of shops and public places), and then more broadly in June (reopening of restaurants and end of the curfew). Despite this, activity remains low in many sectors, far from the hoped-for net recovery in consumption. For the time being, fiscal and social arrangements, as well as financial aid, have been maintained under certain conditions. In addition, companies with already strained cash flow are worried about an increase in the price of raw materials, which they will find difficult to pass on in their sales prices.


Still down over the last 12 months

In this context, which remains complicated, the number of insolvency proceedings continued to fall at the end of June 2021 over a sliding 12-month period, with insolvencies (direct receiverships and liquidations) down by 29%, or 28,164 judgments, and safeguard proceedings down by 14.7% (739 judgments). However, if we compare these figures to the end of March 2021 over a sliding 12-month period, when the number of business failures fell by almost 43% (26,700) and the number of safeguard procedures by 23.4% (713), we can see a gradual recovery in the number of judgments.

At the same time, the number of employees threatened by these same procedures continues to fall, with direct receiverships and liquidations threatening 86,270 jobs and safeguards 45,250. In fact, the typology of failing companies is returning to normal, with mainly VSEs (81.4%) and commercial companies (81.4%).

However, the outcome of insolvencies still remains very unfavorable: 78% of judgments handed down over the last 12 months were direct judicial liquidations, compared to 69% in 2019 and 75% in 2020.


Upstream restructuring while waiting for the rebound

For the largest companies, it is upstream that we see the measures taken in the face of the current economic situation in order to avoid the crash. Since the beginning of the health crisis, between March 1, 2020 and May 24, 2021, Dares has recorded 1,041 job-saving plans (social plans), or 112,700 terminations of employment contracts envisaged since the beginning of the crisis.

The redundancy plans planned between January and May 2021 represent 34,000 terminations of employment contracts, three times more than over the same period in 2020. Almost half of these terminations will be in companies with 1,000 or more employees.

The sectors most affected are manufacturing, trade and automotive repair, and transportation and warehousing.


Sectors and regions that suffer more

Over the last 12 months (to the end of June), nothing seems to have changed: the three major metropolitan economic areas - Île-de-France, PACA and Auvergne-Rhône-Alpes - remain the main sources of business insolvencies, accounting for nearly 49% of direct receiverships and liquidations, as well as 46% of safeguard procedures.

By sector, 54% of direct receiverships and liquidations are recorded in the Construction and Public Works sector and in Business and Consumer Services, and 41.5% for safeguard procedures. For the latter, we note significant increases over 12 months in certain sectors such as Industrial Equipment (+80%), Food Processing (+66.7%) or Media and Leisure (+60%).

In the second quarter of 2021, compared to the second quarter of 2020, the sectors and regions recording an increase in the number of business failures are now in the majority.

Overall, in the second quarter of 2021, the number of insolvencies rose by 12% compared with the same period in 2020. The number of insolvencies is slightly down (-5%).

Among the sectors most affected are construction, where insolvencies rose by 41.6% in the second quarter of 2021, transport (+44.4%), agriculture and fishing (+55%), and industrial equipment (+52.3%). In terms of regions, the Île-de-France and PACA regions are the most affected, with increases of over 30% in the second quarter of 2021.

The next quarter should confirm this trend, but probably with a still limited progression given the summer period involving the closure of transplants... And hoping that the current lull in the pandemic lasts so as not to hamper economic activity at the beginning of the school year in September.